An Asian rethink is overdue
Everyone is, at least to some extent, a product of their past. It is hard to break from the habits picked up over our lifetimes.
History certainly colours the way many outsiders view Asia. Rapid economic growth has transformed the region over the years. Not only does it have much greater economic weight but it is fundamentally different in character.
Yet old ideas about Asia still persist in many circles. One such idea – that the region, outside Japan at least, should be viewed as an emerging market – is still widely held.
A closer look reveals a different story. Hong Kong, Singapore, South Korea and Taiwan – what used to be called the ‘four Asian tigers’ – are broadly comparable to Western Europe in terms of income per head. In total they account for about 3.3% of global output or about the same as Germany. That is hardly a trivial amount by any standards.
It is true that economists generally recognise these countries as developed. It is hard not to do so looking at the hard economic figures.
However, the investment world is often not so advanced. For example, Morningstar does not have a stock market category reflecting all the developed markets in Asia although its Asia-Pacific ex Japan Equity sector comes close.
That is not to have a go at the data provider. The whole industry is trying to come to terms with the shift towards a more Asia-centred world.
Of course, in some cases the development of the financial markets could lag behind the economies. But, as Guy Strapp argues in this month’s Strategically Speaking, investors in the region are becoming increasingly sophisticated (see p75). Hong Kong and Singapore have long positioned themselves as financial centres.
A second important trend that is not fully appreciated is the rise of China (see special report, p61). Although the importance of the mainland is gradually becoming better understood, less is known, particularly outside the region, of what could be called Greater China.
The People’s Republic, Hong Kong and Taiwan are coming to resemble a single economic bloc. Indeed the network could arguably be extended to include ethnic Chinese living in southeast Asia. This accounts for a significant share of regional investment and trade.
The situation is complicated by the peculiar political relationship between Taiwan and the mainland. The People’s Republic still claims the island as one of its provinces even though Taiwan sees itself as a sovereign state.
Given the huge economic and demographic weight of the Asian region, it is imperative that Europeans are familiar at least with the broad contours of its development.
Daniel Ben-Ami, Deputy Editor